My wife's Fidelity 401k has announced the addition of Fidelity's BrokerageLink service to the 401k, which essentially makes a brokerage account available as part of the 401k. They have not published the fees/commission schedule for trading. There will be no account maintenance fees.

For those with experience with BrokerageLink, would you provide feedback on the following:

1. How much do you pay per trade? What does the fee schedule look like on ETF and mutual fund trades?

2. What has been your overall experience using BrokerageLink? What have you liked? What needs improvement?

My understanding is that the fee schedule is the same as for standard retail accounts. The commissions are tiered based upon the total of all household assets held with Fidelity. For accounts > $50K, the commision for stocks and ETFs is $10.95. Here is a link to the fee schedule:

My wife's 401k has this option and we've used it for the past 2 years.

$10.95/trade for stocks and ETFs and $0/trade for Fidelity funds and NTF funds. However, you have to hold the NTF funds for 180 days before you sell, or you pay $75 (short term trading fee). This fee doesn't apply to Fidelity funds.

We've got it set up so that her regular paycheck contributions get split into Fidelity and NTF funds, and then once a year we rebalance into and between ETFs. This keeps the commissions to a minimum.

Things that could be improved:
If you buy any mutual funds in Brokerage link, you have to keep the minimum balance, which ranges between $500 and $10,000, depending on the fund.
You have to setup your regular contribution purchases by phone, can't do it online. Also, if you want to transfer money from brokeragelink back to the regular 401k, you have to do this over the phone as well. Everything else can be done online.

Good things that aren't obvious:
If you set up a regular contribution to a fund in brokeragelink, you can get away w/ less than the minimum additional purchase amount the fund may require. Some of our funds only get $30/paycheck even though they supposedly require $100/purchase.

Consider yourself fortunate. With low price ETFs, you can create a very low cost portfolio.
Hans

I realize that I'm digging this up from the distant past, but I figured since there's already a thread on here I might as well use it instead of creating a new one...

I have three employer-related retirement accounts with Fidelity (Vanguard is not an option) and I just discovered BrokerageLink. I'm curious if any of you have had recent experience with this. Tips? Thoughts?

I'd like to use it for iShares ETFs to cut down on the expenses associated with certain mutual funds (e.g., total bond market, TIPS).

Never having traded ETFs at Fidelity, I'm also curious if there's an option to convert mutual fund shares directly into ETFs (similar to what you can do at Vanguard) vs. selling your mutual funds and subsequently buying the ETFs.

I've used the Fidelity Brokeragelink for 5 years now. I'm in the same situation - first my company switched my 401(k) to Fidelity, then I opened the Brokeragelink to cover my other investing needs. I also opened Roth and Rollover IRAs at Fidelity and have them all linked as one.

My wife and I are at the "Sliver" level. We can purchase individual bonds at $1 each (or $8 minimum). We purchase Spartan Index funds in our IRAs.

By law selling mutual fund shares is a taxable event. It works just like selling stock shares of any company. But there is an exception for switching funds between share classes within a mutual fund. That's not taxable. It's like switching from B shares to A shares within a load mutual fund.

Vanguard chose to set up their ETFs as a new share class within existing mutual funds. That is why they can be exchanged directly without any tax implication.

But Fidelity has no such structure. They encourage you to purchase iShare ETFs (24 of which have commission-free trading). But each iShare ETF is a different legal entity from any of the Fidelity mutual funds. So converting is always a taxable event.

I know this seems somewhat crazy, but that's the law (specifically, the Investment Company Act of 1940, with subsequent revisions). This act is also the reason why some ETFs are not allowed to automatically reinvest dividends and capital gains: ETFs set up as "Unit Investment Trusts" under the 1940 Act lack this reinvestment capability. But Vangaurd's ETF, set up within a mutual fund structure, can reinvest!

I use it through my employer 401k because I did not like their fund options (active mgmt, costs, performance chasing fund choice changes etc)

I have my 401k contribution automaticaly deposited n the Brokeragelink, and I have automated it so that these funds are used to purchase a fixed percentage of four different Spartan Index funds. This allows me to index my funds, at low cost (0.1 or 0.2%), and allows me to set it and forget it.

this has worked beautifully.

they also now have free trades for IShares ETFs.

I have found BrokerageLink to be especially useful since it allows me to purchase TIPS (both auction or secondary mkt) directly, mutual funds (Spartan Funds only in my case), and ETFs (I use the TIPS coupons typically to buy the asset class ETF which I am currently 'lowest' on).

I think if more people understood BrokerageLink, and took the time to set it up (it was abit of a pain) everyone would use it (unless you like the fund choices in your 401k, though this is rarely the case...).

Thanks for the replies. I'll definitely be setting this up. Not sure how best to go about moving the money into ETFs. At worst, I guess I can accumulate mutual fund shares with my regular contributions and then move my money into iShares every once in awhile.

What I can do is setup say a portion of my 401k contribution to go to a money-market fund in the 401k plan. When that reaches over $1,000 --- I can then transfer that $1k online to the Brokeragelink side and add to my funds there.

Yes as other mentioned it can be good for 401k investors to get into the funds they want and especially good if you wanted to take advantage of some of the iShares commission-free ETFs at Fidelity.

SURGEON GENERAL'S WARNING: Any overconfidence in your ability, willingness and need to take risk may be hazardous to your health.

I've used the Brokerage Link in my 401k for about 5 years, too. I use
it to purchase individual TIPS, Fidelity Spartan funds and Vanguard ETFs.
All very low cost.

One caveat to be aware of (at least it works this way in my plan) is how
things work when doing an in-service distribution or loan. I can only
borrow or withdraw from the regular (or non BL) side of my 401k. In my
plan, all sources (pre-tax contributions, co. contributions, earnings, etc.)
are prorated. If I push half of my account to the BL side then half the
pre-tax contributions, half the co.contributions, etc. go to the BL side.
It then becomes unavailable for loans or withdrawals. Your plan may
work differently, you would want to check on this.

In my case, I have about 80% of my account on the BL side. I have a
very small amount of after-tax money that I'd like to withdraw, but to get
to that 80% I would have to push everything back from the BL to
the regular side. Unfortunately, this is a hassle because I own TIPS and
ETFs.

For what it's worth, I called Fidelity this evening to set up BrokerageLink. While my employer allows BrokerageLink in their plans (not all employers do), I was disappointed to learn that we can only use it to invest in mutual funds. No stocks and no ETFs.

This seems kind of silly, but I guess if your employer's fund selection isn't very good, you could use it to get other (better) Fidelity funds, or to step outside of Fidelity. Unfortunately, these non-Fidelity funds often have transaction fees.

As for me, I wanted to replace my Fidelity US Bond Index (FBIDX) holdings with the iShares equivalent (AGG) for the lower expense ratio, but I can't. I guess I could use VBMFX, which has fees comparable to AGG, but I would incur a $75 transaction fee.

In the long run, I suppose I could still set it up and periodically move money from FBIDX to VBMFX whenever I build up a big enough chunk to make it worthwhile. I was, however, hoping that this would be easier.

I have used BrokerageLink with my 401(k) for several years, and my employer also limits it to mutual funds only. No ETFs or stocks/bonds.

Some things to watch for:

1. Make sure the employer match and rollovers from other sources are deposited the same way as your contributions - sometimes there are limitations by employer on how the match is invested, or you have to specifically tell Fidelity to do it. Same goes for regular vs. Roth 401(K) contributions.

2. It takes a couple more days for your BrokerageLink investment to clear vs. investments in your 401(k). If you want to exchange funds between BrokerageLink and your 401(k), you must deposit the monies in the BrokerageLink money market, wait for that transaction to clear, and then start the investment transaction. This takes several days.

3. I heartily recommend paying the $75 transaction if it results in lower fees across big parts of your portfolio. The answer lies in the math. CAVEAT: rebalancing and ongoing investment becomes tricky, since you don't want to continue incurring the fees. SOLUTION: So take TIPS for instance: I put a slug of my TIPS allocation (over 90%) in the Vanguard TIPS and pay a one-time $75 fee. Then I put ongoing contributions in the Fidelity TIPS, and keep accumulating so I have a no-transaction-fee "buffer" to act as a source or sink for my rebalancing transactions. when it gets too large, I move part of it over to the Vanguard fund for another $75 fee.

4. Some Vanguard funds are not available to anyone except Vanguard direct customers. I believe the Vanguard Emerging Markets fund is one of those.

Since someone else reused this thread, I thought it would be best to do the same instead of starting a new one.

DISCLAIMER: This is an old thread--posts above this one are at least several months old.

For those who have some experience with BrokerageLink, is my understanding correct from reading the above that you can set it to automatically allocate deposits it receives to fixed percentages of mutual funds you choose (as opposed to the Fidelity money market fund deposits would be directed to by default)? Additionally, does that functionality allow you to avoid minimum purchase requirements for Fidelity funds?

For example, FSTMX (Spartan Total Market) ordinarily has a $10k minimum, but are you allowed to direct smaller recurring deposits to such a Fidelity fund without having first purchased the minimum in your portfolio? Or do you have to wait until you've purchased the first $10k to start directing additional deposits to it? I suppose I'm wondering when a minimum might not actually be a minimum.

I'm very interested in making use of my company's BrokerageLink option--it provides access to most stocks and ETFs as long as they're not already available in my 401(k), it requires only $2.5k to open, and it has no annual fee. Unfortunately, I'm not familiar with all of BrokerageLink's inner workings or rules, so I'm hoping for some insight before I take the plunge (although I won't be ready to do that for several months yet).

looking for insight as well. Have the option to setup Fidelity Brokerage link.
My question is: If I want to purchase 4 individual stocks each pay period into brokerage link account - do I have to pay $7.95 for each stock every pay period? That would get rather expensive in a hurry.

amdmaxx wrote:looking for insight as well. Have the option to setup Fidelity Brokerage link.
My question is: If I want to purchase 4 individual stocks each pay period into brokerage link account - do I have to pay $7.95 for each stock every pay period? That would get rather expensive in a hurry.

Yes, you would have to pay the $7.95/transaction. Think of Brokerage Link as a Brokerage account that grows tax deferred. If you are going to use Brokerage link, its best to use one of the +1400 No Fee Funds and ETFs that Fidelity offers.

Raging Mage wrote:
For those who have some experience with BrokerageLink, is my understanding correct from reading the above that you can set it to automatically allocate deposits it receives to fixed percentages of mutual funds you choose (as opposed to the Fidelity money market fund deposits would be directed to by default)? Additionally, does that functionality allow you to avoid minimum purchase requirements for Fidelity funds?

I'm not aware of that option but I hope it exists. My contributions go into the MM fund and then I can make trades from there. No fee for Fido and some other funds. To buy a VG fund, at least the one I'm using, incurs a $75 fee. As a result I wait until I have a substantial amount to move.

I will be adding the BrokerageLink feature to my 401K pretty soon. Are there any restrictions on how long you have to hold a stock? In other words could I buy INTEL on Tuesday at $22 and let us assume it jumps to $22.50 in 3 days, can I go ahead and sell it and lock profits in?

StockNovice wrote:I will be adding the BrokerageLink feature to my 401K pretty soon. Are there any restrictions on how long you have to hold a stock? In other words could I buy INTEL on Tuesday at $22 and let us assume it jumps to $22.50 in 3 days, can I go ahead and sell it and lock profits in?

The rules and restrictions for BrokerageLink are set by your 401k plan. What applies to my BrokerageLink account does not necessarily apply to yours. When you activate BrokerageLink you'll be mailed a packet which will explain your plan's rules, limitations and fees.

Until then, your best bet is to call Fidelity. I've found them to be very helpful on the phone.

I just found out about Brokerage Link today and it sounds like a great option, I requested that my plan paperwork be sent to me today.

I have a question for those that utilize Brokerage Link right now. I would like to basically just treat the Brokerage Link account as a regular Brokerage Account. I currently have a rollover 401k in a Scottrade account and actively trade stocks and options with that account and would like to do the same here.

My question is regarding $ going into your Brokerage Link account. I would basically like all the $ I have in my regular Fidelity 401k to be moved to Brokerage Link and my regular $ that comes out of my paycheck into Fidelity to go into the Brokerage Link account as well. Assuming that is possible, what would the $ go into by default? I assume you can specify, but I'd like it to just sit there in cash or a nightly money market sweep until I want to place a trade, but am curious how that works. Thanks for any info!

Unallocated brokeragelink funds go into a Fidelity money market fund. You shouldn't have a problem moving all your 401k funds and future contributions to brokeragelink, and should be able to make the changes online.

newpup wrote:Unallocated brokeragelink funds go into a Fidelity money market fund. You shouldn't have a problem moving all your 401k funds and future contributions to brokeragelink, and should be able to make the changes online.

Just a note that this is 401k plan specific. For example, my employer allows for BL accounts but they can only comprise 90% of you overall 401k allocation. So I have to choose something from my employers plan. Luckily we have a couple of Vanguard options so that's where my extra $$ goes.

You should also be aware that there is a $25/quarter ($100/year) charge for Brokeragelink that is either picked up by your company or passed on to the investor. If you invest the max $16500/year w/ no match, that $100/year = 0.61 ER.

I've been trying to get an answer to this question for many months. My company has BrokerageLink as part of its plan, and I was wondering a simple question after the bloodbath I took in 2008/2009

How can I park my $$ out of my 401K in the event of a massive pull back? I believe the market is going to have a massive correction soon and I'm trying to plan a quasi-exit strategy with my 401K $$. BrokerageLink says any funds placed into BL go into the Fidelity Cash Reserves Money Market account (atleast that's my Core Account with my plan don't know if that's the same for everyone but would assume so).

Simply put my questions are:

1. If you were to park your 401K funds to protect them, and take them out of your investments, but of course not withdrawing them... would this work in your opinion (just move them into the Fidelity Cash Reserves)? Looking for comments and ideas
2. Is there a time limit for the length of time $$ can sit in this account after putting it in there from my 401K? It's a silly question but I'm trying to cover my bases.

I went through all of the BL documentation and even called Fidelity. I thought this was an easy question for those in the know but can't quite nail it down. Thanks for any thoughts you have!

Hmmmmm. But, trying to move in and out of the market into cash is market timing and that also is guessing. So, despite saying nothing about guessing - it's clear your strategy entails at least some of it.

And, to answer your question, sure cash reserves (or stable value fund or money market fund) would be places to move to. Just make sure the expenses are not out of line. But, this is in no way an endorsement of the rest of the plan to market time.

I thought I'd give an update on Brokeragelink as of 2017. My employer has Fidelity 401(k), but suffice to say that for a Boglehead, the only fund that is attractive is Vanguard S&P500 index (which really belongs to a taxable account), the rest being active funds with high expense ratio.
Luckily, they offer the Brokeragelink option. I moved all the assets to Brokeragelink when I had more than $40K, so I'm not quite sure about the minimum you need to have to be able to switch without having any expenses (I think it's $10K, but don't take my word for it).

As far as the choices available, they have all Fidelity ETFs which you can purchase/sell free of charge as well as a few other. The only gotcha before you sell you need to hold a security for 90 days, or else you'll pay a penalty when selling, I'm a buy&hold investor, so it doesn't apply to me.

Right now I have a 50/50 mix of Fidelity REIT index ETF (FSRVX) and Fidelity Emerging Markets Bond Fund (FNMIX) -- yes, the latter is an active fund, but it has done very well for 10 years so far and has beaten the index since 2008. Its expense ratio is 0.86%. The past 10 year returns is 7.58%
The closest equivalent Vanguard fund is VWOB, with a good expense ratio (0.32%) and a return a 4.87% since 2013.